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IRS Will Start Accepting Some Business and Nonprofit Tax Returns Monday

Monday, February 4th, 2013

originally posted on www.accountingtoday.com on February 1, 2013

The Internal Revenue Service plans to begin accepting corporate, partnership and tax-exempt returns starting at 9:00 am Eastern Time on Monday, but with some important exceptions.

In an email to tax professionals on Friday, the IRS said that effective 9:00 am Eastern Time on Monday, February 4, it will begin accepting many of the tax year 2012 calendar and fiscal-year Corporate (Form 1120 series), Partnership (Forms 1065/1065-B), and Tax Exempt Organization (Form 990 series) income tax returns with the exception of filers claiming depreciation deductions and various energy and business tax credits. The IRS said it plans to accept the remaining tax returns in late February or early March.

“In general, this means any business attaching Form 3800 (General Business Credits), Form 4562 (Depreciation and Amortization) or any of the other forms listed below, should wait to file their 2012 tax return at the later date,” said the IRS. “A specific date will be announced in the near future.”

The forms on hold include:

• Form 3800: General Business Credit
• Form 4136: Credit for Federal Tax Paid on Fuel
• Form 4562: Depreciation and Amortization (Including Information on Listed Property)
• Form 5471: Information Return of U.S. Persons With Respect to Certain Foreign Corporations
• Form 5735: American Samoa Economic Development Credit
• Form 5884: Work Opportunity Credit
• Form 6478: Credit for Alcohol Used as Fuel
• Form 6765: Credit for Increasing Research Activities
• Form 8820: Orphan Drug Credit
• Form 8834: Qualified Plug-in Electric and Electric Vehicle Credit
• Form 8844: Empowerment Zone and Renewal Community Employment Credit
• Form 8845: Indian Employment Credit
• Form 8864: Biodiesel and Renewable Diesel Fuels Credit
• Form 8874: New Markets Credits
• Form 8900: Qualified Railroad Track Maintenance Credit
• Form 8903: Domestic Production Activities Deduction
• Form 8908: Energy Efficient Home Credit
• Form 8909: Energy Efficient Appliance Credit
• Form 8910: Alternative Motor Vehicle Credit
• Form 8911: Alternative Fuel Vehicle Refueling Property Credit
• Form 8912: Credit to Holders of Tax Credit Bonds
• Form 8923: Mine Rescue Team Training Credit
• Form 8932: Credit for Employer Differential Wage Payments
• Form 8936: Qualified Plug-in Electric Drive Motor Vehicle Credit

Filing of two other business forms is affected by the delay, but only for electronic filers, the IRS added. Businesses using Form 720 and filling out lines 13 and 14 cannot file yet electronically, but they can file on paper. Other Forms 720 are being accepted electronically. In addition, Form 8849 Schedule 3, Claim for Refund of Excise Taxes, is not currently being accepted electronically, but it can be filed on paper.

On January 7, the IRS said it was ready to accept business tax returns with a year ending prior to Dec. 31, 2012 (see IRS Begins Accepting Business Tax Returns). The IRS began accepting individual tax returns on January 30, but with a similar list of forms excluded (see IRS Opens Tax Filing Season for Individuals and IRS Promises Better Service as it Kicks off Tax Season).

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IRS Kicks Off 2013 Tax Season: Most Individual Returns Can Be Filed Now; Many Ways To Get Tax Help

Wednesday, January 30th, 2013

content issued as IRS Press Release January 30, 2013

WASHINGTON — The Internal Revenue Service today opened the 2013 filing season by announcing a variety of enhanced products and services to help taxpayers prepare and file their tax returns by the April 15 deadline.

New and expanded services for taxpayers this year include a redesigned IRS.gov web site that’s easier to navigate and improved service options, including more video-conferencing assistance sites and additional social media tools. In addition, the IRS has stepped up its enforcement efforts to protect taxpayers from refund fraud and identity theft.

The IRS began accepting and processing most individual tax returns today after updating forms and completing programming and testing of its processing systems to reflect the American Taxpayer Relief Act (ATRA) that Congress enacted on Jan. 2. The vast majority of taxpayers can file now, but the IRS is continuing to update its systems for some tax filers. The IRS will begin accepting tax returns from people claiming education credits in mid-February while taxpayers claiming depreciation deductions, energy credits and many business credits will be able to file in late February or early March. A full list of the affected forms is available on IRS.gov.

This year, taxpayers have until Monday, April 15, to file their 2012 tax returns and pay any tax due. The IRS expects to receive more than 147 million individual tax returns this year, with about 75 percent projected to receive a refund.

Last year for the first time, 80 percent of all individual returns were filed electronically. E-file, when combined with direct deposit, is the fastest way to get a refund. Last year, about three out of four refund filers selected direct deposit.

Assistance Options, Virtual Service Availability

The best way for taxpayers to get answers to their questions is by visiting IRS.gov. Last year, the website received a record 340 million visits, a 17 percent increase over 2011.

This year, the redesigned website makes it easier than ever for taxpayers to get to key forms and vital information. The front page also has links to redesigned pages to help with everything from refunds to specific tax issues as well as easy access to taxpayer-friendly videos on the IRS YouTube channel.

Through IRS.gov, taxpayers can access Free File, which provides options for free brand-name tax software or online Fillable Forms plus free electronic filing. Everyone can use Free File to prepare a federal tax return. Taxpayers who make $57,000 or less can choose from about 15 commercial software providers. There’s no income limit for Free File Fillable Forms, the electronic version of IRS paper forms.

People making $51,000 or less usually qualify for the Volunteer Income Tax Assistance program for free tax preparation and electronic filing. Tax Counseling for the Elderly, a similar community-based volunteer program, offers free tax help with priority assistance to people age 60 and older, specializing in questions about pensions and retirement issues. Information on these programs can be found at IRS.gov.

This year, the IRS is doubling the number of sites where taxpayers can get assistance through two-way video conferencing. During 2012, the program’s first year, about 14,000 taxpayers received assistance at 13 locations. Following a strong response to the virtual assistance program, the IRS plans to roll out 14 new sites. A list of the 27 available locations is on IRS.gov.

For tax law questions or account inquiries, taxpayers can also call the IRS toll-free number 800-829-1040 (7 a.m. to 7 p.m. local time) or visit a taxpayer assistance center. Taxpayers should check IRS.gov for the hours and services offered at the location they intend to visit.

Apps and Social Media

For the third year, the IRS will offer IRS2Go, its smartphone application, which enables taxpayers to check on the status of their tax refund and obtain helpful tax information. The IRS2Go app, available for Apple and Android users, has been downloaded more than 800,000 times and used by taxpayers millions of times.

More helpful information is available through IRS social media platforms, including:

  • YouTube, where viewers can watch more than 100 short, informative videos. They are available in English, Spanish, American Sign Language and other languages.
  • The IRS also has several twitter feeds available for taxpayers in English and Spanish at @IRSnews or @IRSenEspanol. And @IRStaxpros covers news for tax professionals.
  • For the 2013 filing season, the IRS has added Tumblr to its list of social media platforms. People who want tax information now have another way of accessing and sharing helpful tax tips, videos, podcasts and other information at www.internalrevenueservice.tumblr.com

The IRS only uses social media tools to share public information, not to answer personal tax or account questions. And the IRS reminds taxpayers to never post confidential information, such as a Social Security Number, on social media sites.

Check for a Refund

Even with the Jan. 30 opening of the tax season, the IRS expects to issue refunds within the usual timeframes. Last year, the IRS issued more than nine out of 10 refunds to taxpayers in less than 21 days, and it expects the same results in 2013.

After taxpayers file a return, they can track the status of the refund with the “Where’s My Refund?” tool available on the IRS.gov website. New this year, instead of an estimated date, “Where’s My Refund?” will give people an actual personalized refund date after the IRS processes the tax return and approves the refund.

Here are some tips for using “Where’s My Refund?”:

  • Initial information will generally be available within 24 hours after the IRS receives the taxpayer’s e-filed return or four weeks after mailing a paper return.
  • The system updates every 24 hours, usually overnight. There’s no need to check more than once a day.
  • “Where’s My Refund?” provides the most accurate and complete information that the IRS has about the refund, so there is no need to call the IRS unless the web tool says to do so.
  • To use the “Where’s My Refund?” tool, taxpayers need to have a copy of their tax return for reference. Taxpayers will need their Social Security Number, filing status and the exact dollar amount of the refund they are expecting.

Taxpayers should remember that while most tax refunds are issued within 21 days, some tax returns need additional time to be reviewed. As part of that effort, the IRS has put in place stronger security filters this filing season to protect against refund fraud and identity theft.

Identity Theft

Stopping identity theft and refund fraud is a top priority for the IRS, and the agency’s work on identity theft and refund fraud continues to grow. For the 2013 filing season, the IRS has expanded these efforts to better protect taxpayers, help victims and detect refund fraud before it occurs.

The effort includes stronger screening filters for incoming tax returns, increased IRS Criminal Investigation activity and expanded partnerships with local law-enforcement officials and financial institutions. More information is available in IRS Fact Sheet 2013-2.

By late 2012, the IRS assigned more than 3,000 IRS employees — more than double the number from 2011 — to work on identity theft-related issues. IRS employees are working to prevent refund fraud, investigate identity theft-related crimes and help taxpayers who have been victimized by identity thieves. In addition, the IRS has trained 35,000 employees who work with taxpayers to recognize identity theft indicators and help people victimized by identity theft.

The IRS continues to increase its efforts against refund fraud, which includes identity theft. During 2012, the IRS protected $20 billion of fraudulent refunds, including those related to identity theft, compared with $14 billion in 2011.

For more information, see the special identity theft section on IRS.gov.

IRS YouTube Videos:
Do It Yourself Free Tax Preparation:  English | ASL

When Will I Get My Refund?:  English | ASL

IRS Social Media:  English

Podcast:
Do It Yourself Free Tax Preparation

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Treasury Audit Says IRS Missed More Than $5 billion in ID Theft-related Tax Fraud Last Year

Thursday, August 9th, 2012

Originally posted on WashingtonPost.com on Thursday, Aug 2, 2012

WASHINGTON — The Internal Revenue Service may have delivered more than $5 billion in refund checks to identity thieves who filed fraudulent tax returns for 2011, Treasury Department investigators said Thursday. They estimate another $21 billion could make its way to ID thieves’ pockets over the next five years.

The IRS is detecting far fewer fraudulent tax refund claims than actually occur, according to a government audit that warned the widespread problem could undermine public trust in the U.S. tax system. Although the IRS detected about 940,000 fraudulent returns for last year claiming $6.5 billion in refunds, there were potentially another 1.5 million undetected cases of thieves seeking refunds after assuming the identity of a dead person, child or someone else who normally wouldn’t file a tax return.

In one example, investigators found a single address in Lansing, Mich., that was used to file 2,137 separate tax returns. The IRS issued more than $3.3 million in refunds to that address. Three addresses in Florida, the epicenter of the identity theft crisis, filed more than 500 returns totaling more than $1 million in refunds for each address.

In one example, investigators found a single address in Lansing, Mich., that was used to file 2,137 separate tax returns. The IRS issued more than $3.3 million in refunds to that address. Three addresses in Florida, the epicenter of the identity theft crisis, filed more than 500 returns totaling more than $1 million in refunds for each address.

In another troubling scenario, hundreds of refunds were deposited into the same bank account — a red flag for investigators searching for ID thieves who may be filing for refunds for multiple people. In one instance, the IRS deposited 590 refunds totaling more than $900,000 into one account.

“We found multiple reasons for the IRS’s inability to detect billions of dollars in fraud,” J. Russell George, the Treasury Department’s inspector general for tax administration, in a statement. “At a time when every dollar counts, these results are extremely troubling.”

Topping the list of concerns is the IRS’s lack of timely access to third-party information it needs to verify returns and root out fraud.

Many Americans are struggling to pay their bills and the IRS takes pride in processing returns and issuing refunds promptly. But taxpayers can start filing their returns in mid-January, while employers and financial institutions don’t have to submit withholding and income documents for taxpayers to the IRS until the end of March. That means the IRS often issues refunds long before it can confirm the veracity of what’s listed on taxpayer returns.

Thieves are also exploiting vulnerabilities in the way the IRS delivers refunds, investigators found. Of the 1.5 million undetected cases of potential fraud, 1.2 million used direct deposits, including pre-loaded debit cards. Thieves often prefer those methods to a paper check, which require a physical address to receive the check and photo ID matching the taxpayer’s name to cash it.

IRS officials said the growth of identity theft-related fraud is one of its biggest challenges. Already this year, the agency has stopped almost $12 billion in confirmed fraud, it says. And it says its criminal investigators are actively pursuing those who perpetrate fraud — including the previously undetected cases identified by the audit.

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House Democrats Introduce Tax Cut Extension Bill

Tuesday, July 31st, 2012

-originally posted on Accounting.com on July 30th

Democrats on the House Ways and Means Committee introduced on Monday a version of the middle-class tax cut extension legislation that passed the Senate last week.

The legislation, H.R. 15, would extend the Bush tax cuts for households with incomes up to $250,000. It is identical to the version approved last week in the Senate in a 51-48 vote (see Senate Approves Tax Cuts Extension for Middle Class). House Republicans have also introduced their own Bush tax cuts extension bill, which would extend the tax cuts for all income levels. A vote on both bill is expected later this week (see House to Vote Next Week on Dueling Bush Tax Cut Extension Bills).

Separately, Ways and Means Democrats also introduced legislation, H.R. 16, to reinstate the 2009 estate tax provisions, in which there was a top rate of 45 percent and a $3.5 million exemption, to ensure that 99.7 percent of decedents will face no estate tax liability.  The Republican bill spends approximately $9 billion more to provide a complete exemption from the estate tax for 3,600 additional decedents.

Despite the movement in Congress in recent weeks over the tax cuts extension, the two parties are not likely to agree on a deal before the November elections and the lame-duck session afterward.

“The problem we’re having is the deadlock over the middle-class tax cut and whether millionaires need to get the biggest cut out of the tax cut,” said Ways and Means ranking Democrat Sander Levin, D-Mich., during a conference call with reporters Monday. “Until we resolve that, it’s hard. … As long as there is this strangelehold over action, it’s difficult to know how to resolve that.” He expressed similar skepticism over passing a tax extenders bill to deal with dozens of other expiring and expired tax breaks.

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Obama Signs JOBS Act for Small Businesses into Law

Monday, April 9th, 2012

originally posted on AccountingToday.com on April 5, 2012 – by Michael Cohn

President Obama signed into law on Thursday the Jumpstart Our Business Startups Act, also known as the JOBS Act, which lowers the regulatory and auditing barriers for companies to seek funding and enter the capital markets.

Congress passed the bill late last month with strong bipartisan support, despite opposition from several investor groups and accounting organizations warning that the bill would weaken auditing safeguards and investor protections (see Congress Passes JOBS Act for Small Business).

“I’ve always said that the true engine of job creation in this country is the private sector, not the government,” Obama said in a speech in the White House Rose Garden to mark the signing of the bill. “Our job is to help our companies grow and hire. That’s why I’ve cut taxes for small businesses over 17 times. That’s why every day I’m fighting to make sure America is the best place on Earth to do business.”

The bill packaged together several bills that had made progress in several congressional committees in the past year, but not been enacted into law until now. It was introduced by House Majority Leader Eric Cantor, R-Va., who praised the bill when it was signed into law.

“Today, I was proud to join my colleagues and members of the business community as the President signed the bipartisan JOBS Act into law,” he said in a statement. “This bipartisan package will spur job creation by removing outdated regulations and increasing access to capital so that small businesses and startups can grow and create jobs. The bipartisan JOBS Act is the culmination of hard work by both parties in Congress, the White House and the business community, especially Steve Case. And, it shows we can set aside our differences and work together on areas of common ground to grow the economy and get people back to work.”

The bill aims to reduce the costs of going public by giving companies a temporary reprieve from certain Securities and Exchange Commission regulations, phasing in the regulations over five years to allow smaller companies to go public sooner. The bill would also create a new category of issuers called emerging growth companies, which would retain that status for five years or until they exceed $1 billion in annual gross revenue or become large accelerated filers.

Another provision would remove an SEC regulatory ban preventing small businesses from using advertisements to solicit investors. The bill also removes SEC restrictions on “crowdfunding” so entrepreneurs can raise equity capital from a large pool of small investors who may or may not be considered “accredited” by the SEC. Companies would be able to pool up to $1 million from investors without registering with the SEC, or up to $2 million if the company provides the SEC with audited financial statements.

Another provision makes it easier for small businesses to go public by increasing the offering threshold for companies exempted from SEC registration from $5 million to $50 million. Another provision removes barriers to capital formation for small companies by raising the shareholder registration requirement threshold from 500 to 1,000 shareholders.

Despite the bipartisan support, the bill provoked warnings from SEC chair Mary Schapiro that it would weaken key investor protections and make it easier for fraudsters to dupe investors. The Consumer Federation of America and the AFL-CIO have also warned about the weakening of investor protections. Some Democratic senators tried to amend the bill to raise the exemption levels. Critics have pointed out that the $1 billion revenue threshold for emerging growth companies would encompass the vast majority of companies that have gone public, not just small businesses.

The Center for Audit Quality, the American Institute of CPAs and the Council of Institutional Investors have also warned about the weakening of Sarbanes-Oxley rules for audits of internal controls by exempting the new category of emerging growth companies from the audits for five years (see Small Business Bill Would Weaken Audit Protections). Under the Dodd-Frank Act of 2010, only companies with a public float of less than $75 million were exempted from Sarbanes-Oxley audits of their internal controls. In the JOBS Act, the market capitalization level would rise to $700 million. Emerging growth companies would be exempt from the internal control audits for five years, or until they reached that $700 million market cap. Instead of three years of audited financial information, emerging growth companies could go public with only two.

Under the bill, there also would be no requirement to comply with new or revised financial accounting standards for public companies from the Financial Accounting Standards Board until the standards were also applicable to private companies.

Other provisions of the bill would make it easier for financial analysts for the financial firms that underwrite initial public offerings to issue reports on the companies.

Brokers and dealers would be able to arrange for communications between securities analysts and potential investors in an emerging growth company that was planning to go public and securities analysts would be able to participate in communications with the management of an emerging growth company alongside people associated with the brokers or dealers working for the company.

Another provision would allow companies to work out disagreements with regulators such as the Securities and Exchange Commission outside public view before they go public. That provision might have allowed companies like Groupon to hide their accounting issues before going public.

The bill would also weaken Dodd-Frank Act provisions giving shareholders a say on executive compensation. There would be no requirement for a shareholder “say on pay” for emerging growth companies.

Despite these drawbacks, there was praise for the bill being signed into law from some quarters. Slava Rubin, the CEO of the global crowdfunding site Indiegogo.com, represented the crowdfunding industry at the White House for the signing of the bill and was invited to participate in a private roundtable discussion before the bill signing as well.  He called the signing of the bill “an incredible day for America.”

“This country was built on entrepreneurship and now every American will have an equal opportunity to stimulate tomorrow’s new companies and job growth,” he added.

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Eight Tips for Taxpayers Who Receive an IRS Notice

Wednesday, August 24th, 2011

From www.IRS.gov.

Every year the Internal Revenue Service sends millions of letters and notices to taxpayers, but that doesn’t mean you need to worry. Here are eight things every taxpayer should know about IRS notices – just in case one shows up in your mailbox.

1. Don’t panic. Many of these letters can be dealt with simply and painlessly.

2. There are number of reasons the IRS sends notices to taxpayers. The notice may request payment of taxes, notify you of a change to your account or request additional information. The notice you receive normally covers a very specific issue about your account or tax return.

3. Each letter and notice offers specific instructions on what you need to do to satisfy the inquiry.

4. If you receive a correction notice, you should review the correspondence and compare it with the information on your return.

5. If you agree with the correction to your account, usually no reply is necessary unless a payment is due.

6. If you do not agree with the correction the IRS made, it is important that you respond as requested. Write to explain why you disagree. Include any documents and information you wish the IRS to consider, along with the bottom tear-off portion of the notice. Mail the information to the IRS address shown in the lower left part of the notice. Allow at least 30 days for a response.

7. Most correspondence can be handled without calling or visiting an IRS office. However, if you have questions, call the telephone number in the upper right corner of the notice. Have a copy of your tax return and the correspondence available when you call.

8. It’s important that you keep copies of any correspondence with your records.

For more information about IRS notices and bills, see Publication 594, The IRS Collection Process. Information about penalties and interest charges is available in Publication 17, Your Federal Income Tax for Individuals. Both publications are available at www.IRS.gov or by calling 800-TAX-FORM (800-829-3676).

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IRS Says Air Travelers May Get Refund on Ticket Taxes

Monday, August 1st, 2011

The Internal Revenue Service said that some travelers may be entitled to refunds on the ticket taxes that airlines have been charging after Congress failed to pass a reauthorization bill last Friday for the Federal Aviation Administration.

Despite the lapse of the ticket taxes, many airlines have quietly raised their fares and are pocketing the money they would have otherwise turned over to the federal government to fund the FAA and various airport and air traffic control projects. The move has outraged many passengers and some senators are asking the airlines to keep the funds in escrow until they can be turned over to the FAA (see Senators Tell Airlines to Stop Pocketing Ticket Taxes). In a frequently asked questions page posted on its Web site Tuesday and updated Wednesday, the IRS provided information on what passengers should do about the taxes.

The IRS said that “airlines are not authorized to collect the tax during any period in which it does not apply.”
However, that left open the matter of whether airlines could raise their fares by a comparable amount.

On the question of whether a passenger who purchases a ticket at a time when the tax is not in effect but travels after the tax is reinstated would be subject to tax, the IRS responded that it depends on how such travel is treated in any legislation reinstating the tax. “The legislation could either impose tax on all travel occurring after its enactment or provide an exemption for passengers who purchased tickets during the period when the tax was not in effect,” said the IRS.

In some cases, though, airlines may need to refund the taxes to passengers.

“Passengers who paid for tickets on or before July 22, 2011, for travel beginning on or after July 23, 2011, may be entitled to a refund of the tax,” said the IRS. ”Airlines are permitted to refund the tax to the passenger, just as they do in the ordinary course of business when issuing refunds for unused refundable tickets (including the associated taxes). Because the airlines and travel service providers already have the information about passenger ticket purchases and travel, and in many cases have payment card information that may facilitate streamlined refunds, the IRS has asked the airlines to provide refunds to eligible passengers when requested. However, passengers who are unable to obtain a refund from the airline may obtain a refund by submitting a claim to the IRS. Because the IRS has no information about passenger ticket purchases or travel dates, travelers who are unable to obtain a refund from the airline will be required to submit proof of taxes paid and travel dates to the IRS under procedures that are under development. The IRS will provide additional guidance at a later date.”

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Airlines Benefit More from Ticket Tax Holiday than Passengers

Monday, July 25th, 2011

Congress’s failure to reauthorize funding for the Federal Aviation Administration last Friday means that airlines can’t collect the federal excise tax on airline tickets, but most airlines quietly raised their fares so they could still pocket the extra money anyway.

There are a few exceptions for now, luckily. Alaska Airlines and Hawaiian Airlines currently aren’t collecting the tax or raising their prices, according to local Hawaiian station KITV.com. Spirit Airlines has also been passing along the extra savings to consumers, according to The Wall Street Journal. Virgin America also gave passengers a break over the weekend, but raised its price Monday morning.

The lack of reauthorization means the FAA had to furlough thousands of employees and close down many of its airport reconstruction projects. However, Congress’s failure to pass the FAA reauthorization also meant the FAA cannot collect its 7.5 percent federal excise tax for now, nor the flat fee of $3.70 per travel segment, and the international arrival and departure taxes of $16.30 per way.

Theoretically that should save airline customers a lot of money, except that most of the major airlines raised their prices over the weekend by 7.5 percent or more, including American Airlines, Delta, Frontier, JetBlue, Southwest and US Airways.

At least they’re making money. The U.S. Treasury will lose an estimated $200 million a week, according to the Transportation Department, at a time when the federal government is in danger of default if the debt limit isn’t raised by August 2.

The Internal Revenue Service is monitoring the situation, as Forbes.com blogger Kelly Phillips Erb noted. “The laws authorizing the airline ticket tax and other aviation-related taxes expired at midnight on Friday, July 22,” the IRS said on its Web site Saturday. “The IRS continues to monitor pending legislation related to this issue. The IRS will continue to work with the airline industry to address issues relating to the collection and payment of the taxes involved. Taxpayers do not need to take any action at this time. The IRS will provide further guidance on this issue in the near future.”

It would be a good idea if the airline companies had to repay all that extra money they charged on passengers’ tickets either to the Treasury or as a refund to passengers.

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IRS May Have Violated over 32,000 Taxpayers’ Tax Lien Rights

Wednesday, July 20th, 2011

An estimated 32,552 taxpayers may have been harmed because the Internal revenue Service did not follow legal requirements to notify them and their representatives of their rights related to tax liens in a timely fashion, according to a new government report.

The report, from the Treasury Inspector General for Tax Administration, found that the rights of some taxpayers may have been violated or jeopardized because the IRS failed to prove it sent notices of federal tax liens on a timely basis. Section 6320 of the Tax Code requires the IRS to notify taxpayers in writing, at their last known address, within five days of the filing of a Notice of Federal Tax Lien.

Each year, TIGTA is legally required to determine whether the IRS’s tax lien notices comply with the statutory requirement. The IRS also has its own procedures for notifying taxpayers’ representatives when federal tax liens are filed.

However, the IRS may not have always complied with this statutory requirement and it did not always follow its own procedures for timely notifying taxpayer representatives of the filing of lien notices, TIGTA found.

TIGTA reviewed a sample of 125 federal tax liens filed for the 12-month period ending June 30, 2010, but could not determine whether all of these notices were mailed on a timely basis. In addition, the report found that the IRS did not always follow its own procedures for notifying taxpayers’ representatives that federal tax lien notices had been filed.

Based on the sample, TIGTA estimated that 32,552 taxpayers may have been adversely affected. In situations when a lien notice was returned as undeliverable, TIGTA found that the IRS did not always resend these undeliverable notices, even though it had updated the addresses for the taxpayers.

“Taxpayers have the right to receive timely notification of the filing of federal tax liens,” said TIGTA Inspector General J. Russell George in a statement. “The IRS must ensure that the rights of these taxpayers are adequately protected.”

TIGTA made one recommendation to the IRS in its report, and the IRS agreed with the recommendation. TIGTA recommended that IRS officials ensure that procedures to address the handling of undelivered lien notices are consistent. The IRS said it plans to re-evaluate their procedures to ensure they are consistent across the functions and support the timely resolution of undelivered notices.

“We continue to explore ways to enhance our systemic processes to ensure notices are sent, as required, to the most current addresses of the taxpayers and pursuant to policy, to authorized representatives,” wrote IRS deputy inspector general for audit Michael R. Phillips in response to the report. “We also continue to strive to simplify and unify our procedural approach to handling notices that are returned by the Postal Service. We concur that the timely and proper issuance of lien Collection Due Process notices is of utmost importance. You sampled 125 cases and found no instances in which a notice was sent to the wrong address.”

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Summer Day Camp Expenses May Qualify for a Tax Credit

Wednesday, July 13th, 2011

Along with the lazy, hazy days of summer come some extra expenses, including summer day camp. But, the IRS has some good news for parents: those added expenses may help you qualify for a tax credit.
Many parents who work or are looking for work must arrange for care of their children under 13 years of age during the school vacation.
Here are five facts the IRS wants you to know about a tax credit available for child care expenses. The Child and Dependent Care Credit is available for expenses incurred during the summer and throughout the rest of the year.

1. The cost of day camp may count as an expense towards the child and dependent care credit.
2. Expenses for overnight camps do not qualify.
3. Whether your childcare provider is a sitter at your home or a daycare facility outside the home, you’ll get some tax benefit if you qualify for the credit.
4. The credit can be up to 35 percent of your qualifying expenses, depending on your income.
5. You may use up to $3,000 of the unreimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.
For more information check out IRS Publication 503, Child and Dependent Care Expenses. This publication is available at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).

Reference:
IRS Publication 503, Child and Dependent Care Expenses

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